My husband works full-time as a Graphic Designer (permanently employed) and has just completed some freelance work (it was less than £1,000) in addition to his normal job.

How does he go about declaring this work for tax purposes? Does he need to register as self-employed and fill in a tax return? If he does, would he be able to use the short version, or would he need the full tax return? If we do make declarations to the taxman to reflect this income, will the current employer find out?

asked 1 year ago by
Category: Freelance
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Asked on 28/01/2017 7:14 pm
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Your husband should report the income from his freelance work on a personal tax return. If your husband does not already file one of these, he should contact HM Revenue & Customs to advise them that he has received this income and ask that they register him for self-assessment.

HMRC will then issue him with a reference number to allow him to file a tax return (which can be done with the help of an accountant or online using HMRC’s free software).

Dates and documents to mark

Assuming his freelance work was done in the current tax year (which started on April 6th 2011), then the income needs to be reported on the tax return for the year ending April 5th 2012, which needs to be filed online with HMRC prior to January 31st 2013. This return will need to include all of his other income, including his employment income (he can use his P60 form to obtain the information which needs to go on the personal tax return).
One-off, or not?

Your husband should consider whether this is a one-off receipt or is the start of a freelancing business which will receive more income in the future. This will determine whether any national insurance is due.If this is a one-off then it can be reported as “other income” on the tax return which will trigger a personal tax liability.However if it represents the first invoice raised by a new business and it is anticipated that more income will be generated, then it needs to be reported as self-employment income, which will result in a Class 4 national insurance as well as personal tax – and he will also need to commence payment of Class 2 national insurance.

He may be pleased to know…

More positively, as he is already in employment he may be able to defer the national insurance contributions dependent upon the level of his employment income. He may wish to speak to an accountant about this.

Finally, his current employer will not be notified by HMRC about this income or be able to find this out from HMRC.

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Answered on 28/01/2017 7:21 pm